@Zack Kahl
The situation across all of western Canada (coming to a GTA near you soon!) is a grossly overbuilt oversupplied condo market. So let’s play this out for a decade or so..
You’ve got condo corps where owners are watching their investment drop in value monthly, in many cases by as much or more than what their mortgage payment is. Paying $1,000 for your mortgage? Your condo likely dropped ~ $1k value last month too. So what happens for the next ten years or so? Remember, new condo builds have barely slowed at all, and in some cases (SK) haven’t slowed even a little bit. So,.. the situation will get worse.
What does this mean to your Corp? Well, it likely means the board will do their best to keep fee increases to a minimum being conscious of people’s concerns about paying $600 monthly to service a condo that used to be done for $400 monthly and now is worth 20% less than it used to be. So, some corps will freeze fees for a while. This is going to put pressure on your reserve fund more than usual.
Why do you care about that?
Well, because if you own a condo right now, you’re not only going to watch the value slowly decline for the next ten years but you’re going to watch the reserve slowly deplete for the next decade also. So when it comes time to exit... you’re going to have a condo valued even less than when you purchased, with little or not much of any reserve fund, and since it dropped in value monthly by something somewhat comparable to your mortgage payment (which is P&I) you’re quite likely underwater.
Super cool, right? (<—- sarcasm font)
So unless you’re buying a condo for less than what it will be worth 10 years from now and using a calculation of ~2% on a declining basis annually... I wouldn’t even consider it. Even then,.. you’re taking more risk than necessary.
When there are areas and asset classes that will be slowly appreciating, why in the world would anyone buy something that’s going to bleed you monthly?
